People might wonder what happens to credit card debt when someone dies. In 2023, the average credit card balance was $6,365. Legal experts explain that the responsibility for paying off a credit card account can vary depending on state law, the value of the estate, and whether there is a joint cardholder. What is consistent is there’s no automatic debt forgiveness.
Credit card balances generally are paid out of the deceased’s estate. There is a process called probate, in which a court transfers the assets to ensure all debts and taxes are paid. Whomever a will names as executor is responsible for carrying out the will’s instructions on how assets are to be allocated.
Inheriting relatives are not required to pay off the debt out of their own funds except in the following community property states: Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. With a joint credit card, the surviving cardholder is responsible for paying off the balance.
In most cases, credit card debt is paid out of the estate’s assets, but there are exceptions. Retirement accounts are exempt, and life insurance benefits are not tapped as well.
You Shouldn’t Worry About Money in Retirement
Seniors have less worry with extra retirement income. Here at Council of Seniors, we’re working tirelessly to get Congress to pass The SAVE Benefits Act. Because the annual Social Security cost-of-living adjustment (COLA) has fallen short in recent years, this legislation is critical. Once it passes, the amount of $581 will be returned to seniors.
Please sign our petition right away to help. Your participation can be a game-changer in returning this money to seniors.
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